FG REPLIES ATIKU: PLAYING POLITICS WITH ECONOMY DANGEROUS
The Federal Government has cautioned Alhaji Atiku Abubakar against playing politics with the economy. Reacting to a statement credited to the former vice president that the Nigerian economy under President Goodluck Jonathan was performing dismally, FG accused Atiku of shooting in the dark without being armed with the right information.
Atiku had in a press conference on Tuesday declared that all was not well with the economy; citing depletion of the excess revenue from oil sale, poor budget performance, excessive borrowing among others as cases of high level of non-performance.
But the Minister of Finance, Olusegun Aganga who replied Atiku on behalf of the Federal Government told state House correspondents, after the weekly Federal Executive Council (FEC), that 'it is dangerous to play politics with the economy because the facts are there, you cannot argue with the facts. When you say 'dangerously low level,' that is untrue, that is not a statement of fact. It is always difficult to shoot from the dark; so it is always important to have the right information.'
Aganga who said government would be sending the 2011 budget as well as the Bill for the establishment of the sovereign wealth fund to the National Assembly in two weeks time for the legislature's consideration and approval said contrary to claims by Atiku, government's economic reform programmes were on course.
The minister said in terms of the performance of the budget, the recurrent expenditure has achieved 100 per cent implementation while over N750 billion of the capital expenditure has so far been released with a determination to hit N900 billion by the end of the 2010 financial year. 'Budget implementation means different things to different people. When you look at the expenditure side, as of date we have implemented the recurrent part of it 100 per cent. On the capital side, we have declared at least N750 billion; we expect to be N900 billion if not more by the end of the year. We are still implementing the budget. And at that level, in absolute numbers, it is the highest we have had for the last five years,' he said.
He disclosed that what the Federal Government had been doing in the last few months was to settle legacy issues, especially the payment of N200 billion to pay off Power Holding Company of Nigeria (PHCN) staff, payment of N387 billion, representing 53 per cent salary increase to civil servants and the release of N87.7 billion to the Independent National Electoral Commission (INEC), in preparation for the 2011 general elections.
'The second point on the recurrent expenditure is that, if you look at what this government under President Jonathan has done, we have approached and attacked all legacy issues, difficult issues for previous governments.
For example, we made a provision for the N200 billion for PHCN staff, this is to do with legacy issues, arrears, monetization issues that we have had for over seven years. This year we all decided to prioritize power and you have seen a lot of allocation to power, including a lot of the contracts today. This year, we increase the salary of workers by 53 per cent effective from July. We did make a provision of about N387 billion.
On the alleged depletion of the excess crude account, Aganga explained that the three tiers of government-federal, state and local government jointly invested $5.5 billion on the different National Independent Power Projects (NIPPs) across the country as well as another investment of $1 billion as seed money for the takeoff of the National Sovereign Wealth Fund (NSWF), all from the excess crude account noting that the essence of the account.
According to him 'the other point that was made was on the depletion of the excess crude oil account, we need to ask why it was created in the first instance, when it was first created it was suppose to be savings for when you have sustained fall in oil price.
When we had oil high price it went up but in 2008 the oil price fall from about $147, now that is precisely what it was used for, to be used in such situations. If the government did not save that and it was not available to be used, we had two options bearing in mind that our economy is heavily dependent on government spending. One option is to go and borrow, we don't want to borrow for domestic consumption it doesn't make sense. The second option is not to do anything at all and it closed the economy completely'.
The minister said 'so part of that money went into what it was suppose to go for and that is why it was set up. The second point is that out of that money that we are talking about people tend to forget and I like to remind you, that $5.5 billion of that money by the three tiers of government went into power a critical area of the economy and you will start seeing the effect from next quota, what we call the NIPP projects. $1 billion of that has been set aside for the sovereign wealth fund, now that is what we have done to date but you cannot transform an economy just based on that'.
The CBN, its report to the council said 'there had been steady growth in Gross Domestic Product, GDP, which continues to be driven largely by the non-oil sector, particularly agriculture, but the persistence of high inflation remains a challenge. Interbank rates and other money markets rates, including lending, also moderated. The foreign exchange market was substantially stable, while the slow but steady recovery in the capital market continued. The growth in monetary and private sector credit-aggregates however remained sluggish'.
The apex bank also told the government that it has so far made available the total sum of N199.671 billion credit facilities to 516 manufacturers/SMEs under the manufacturing/SMAs loan restructuring/ refinancing scheme fund at a fixed rate of 7 per cent.